Summary of Work: Squamous differentiation is a multi-stage process that occurs in many tissues. The molecular link between control of growth arrest and differentiation is being studied. Insight into these mechanisms are important not only for understanding the control of normal differentiation but also the defects in diseases such as squamous metaplasia and cancer. Several different signaling pathways can induce squamous differentiation including those initiated by interferon gamma and phorbol esters. We demonstrated that keratinocytes become growth arrested at a specific point in the G1 of the cell cycle and is accompanied by an inhibition of Rb phosphorylation, decrease in cdk activity and induction of the cdk-inhibitors p27, p21 and p16. Although ectopic expression of p21 or p27 causes growth arrest, cells do not differentiate suggesting that additional signals are involved in terminal differentiation. Carcinoma cells are resistant to terminal differentia- tion and changes in growth-regulatory genes and induction of squamous- specific genes were not observed. We have identified and cloned several genes that are regulated during squamous differentiation, including transglutaminase type I (TGase I) and a membrane protein CL-20/EMP-1. To study the transcriptional regulation of these genes, we cloned the upstream regulatory region of TGase I and CL20, and determined by footprinting, deletion mutation and mobility shift assays DNA elements that CREB/AP-1-like sites are important in their transcriptional control. The 2.9kb upstream regulatory region of the TGase I gene to control the expression of a chloramphenicol acetyltransferase (CAT) reporter gene was also analyzed in vivo. These studies showed that the -2.9 kb promoter region contains all the information for the proper issue- and differentiation-specific expression of TGase I.